Decide what constitutes a pass/fail signal for the test. At what point would you say that your hypotheses wasn’t even close to correct?

Consider if their business worth pursuing? (Give us an estimate of market size)

Start their team’s blog/wiki/journal to record their progress during for the class

The Nine Teams PresentEach week every team presented a 10 minute summary of what they had done and what they learned that week. As each team presented, the teaching team would ask questions and give suggestions (at times pointed ones) for things the students missed or might want to consider next week. (These presentations counted for 30% of their grade. We graded them on a scale of 1-5, posted our grades and comments to a shared Google doc, and had our Teaching Assistant aggregate the grades and feedback to pass on to the teams.)

Our first team up was Autonomow. Their business was a robot lawn mower. Off to a running start, they not only wrote down their initial business model hypotheses but they immediately got out of the building and began interviewing prospective customers to test their three most critical assumptions in any business:Value Proposition, Customer Segment and Channel. Their hypotheses when they first left the campus were:

Value Proposition: Labor costs in mowing and weeding applications are significant, and autonomous implementation would solve the problem.

Customer Segment: Owners/administrators of large green spaces (golf courses, universities, etc.) would buy an autonomous mower. Organic farmers would buy if the Return On Investment (ROI) is less than 1 year.

Channel: Mowing and agricultural equipment dealers

All teams kept a blog – almost like a diary – to record everything they did. Reading the Autonomow blog for the first week, you could already see their first hypotheses starting to shift: “For mowing applications, we talked to the Stanford Ground Maintenance, Stanford Golf Course supervisor for grass maintenance, a Toro distributor, and an early adopter of an autonomous lawn mower. For weeding applications, we spoke with both small and large farms. In order from smallest (40 acres) to largest (8000+ acres): Paloutzian Farms, Rainbow Orchards, Rincon Farms, REFCO Farms, White Farms, and Bolthouse Farms.”

“We got some very interesting feedback, and overall interest in both systems,” reported the team. “Both hypotheses (mowing and weeding) passed, but with some reservations (especially from those whose jobs they would replace!) We also got good feedback from Toro with respect to another hypothesis – selling through distributor vs. selling direct to the consumer.”

The Autonomow team summarized their findings in their first 10 minute, weekly Lesson Learned presentation to the class.

Our feedback: be careful they didn’t make this a robotics science project and instead make sure they spent more time outside the building.

Personal Libraries
Our next team up was Personal Libraries which proposed to help researchers manage, share and reference the thousands of papers in their personal libraries. “We increase a researcher’s productivity with a personal reference management system that eliminates tedious tasks associated with discovering, organizing and citing their industry readings,” wrote the team. What was unique about this team was that Xu Cui, a Stanford postdoc in Neuroscience, had built the product to use for his own research. By the time he joined the class, the product was being used in over a hundred research organizations including Stanford, Harvard, Pfizer, the National Institute of Health and Peking University. The problem is that the product was free for end users and few Research institutions purchased site licenses. The goal was to figure out whether this product could become a company.

The Personal Libraries core hypotheses were:

We solve enough pain for researchers to drive purchase

Dollar size of deals is sufficient to be profitable with direct sales strategy

The market is large enough for a scalable business

Our feedback was that “free” and “researchers in universities” was often the null set for a profitable business.

The Week 2 Lecture: Value PropositionOur working thesis was not one we shared with the class – we proposed to teach entrepreneurship the way you would teach artists – deep theory coupled with immersive hands-on experience.

Our lecture this week covered Value Proposition – what problem will the customer pay you to solve? What is the product and service you were offering the customer to solve that problem.

Feeling Good
Seven other teams presented after the first two (we’ll highlight a few more of them in the next posts.) About half way through the teaching team started looking at each other all with the same expression – we may be on to something here.

12 Responses

Exciting to see the class in progress. I have talked to two different students who are starting businesses and tried to share this process with them. Both wanted to just write up the business plan. But eventually this will catch on!

[…] it to Test Your Market and Your Assumptions: Steve Blank likes to say that a business model is just a set of hypotheses about the market. So you can use the business model to test your assumptions about what will work […]